May 10, 2011

The Honorable Herb Kohl The Honorable Mike Lee

United States Senator United States Senator
Chairman, Ranking Member,
Subcommittee on Antitrust, Subcommittee on Antitrust,
Competition Policy and Consumer Rights Competition Policy and Consumer Rights
Judiciary Committee Judiciary Committee
330 Hart Senate Office Building 825 Hart Senate Office Building
Washington, DC 20510 Washington, DC 20510

Dear Chairman Kohl and Ranking Member Lee,

As you know, innovation within the wireless industry has greatly improved the quality life in
some rural and remote areas throughout this country. From telemedicine to Internet-based rural
education, wireless services are playing an ever-expanding role in our lives. Small businesses
in the farthest reaches of our country are using wireless technology to compete in the global
marketplace – essentially leveling the playing field. All of this, in part, is due to the availability
of wireless services. Wireless technology, to be sure, is directly linked to the growth and
prosperity of our rural communities.

As such, we feel compelled to voice our concern over the negative impact AT&T’s proposed
takeover of T-Mobile will have in rural and marginalized communities, especially when
poverty rates are statistically high in rural communities. Further consolidation within the
wireless industry would result in reduced services to these rural areas, less consumer choice,
higher prices and diminished innovation.

Consider the following: the acquisition of T-Mobile will leave AT&T and Verizon controlling
approximately 80% of all wireless industry revenue. Rural carriers will struggle to stay afloat
with the affordable plans they offer their small consumer bases. Additionally, prices will likely
increase for all consumers since there is little reason to believe that the two larger carriers
would try to compete on price. The carriers with the most clout, AT&T and Verizon, tend to
set the pricing scheme for the entire industry. For example, in 2009, Verizon increased its early
termination fees for smartphones to $350. Less than a year later, AT&T also more than
doubled its ETFs to $325. Rural carriers will also be largely unable to provide new
technologies, as device makers will have no incentive to create the latest handsets for carriers
that only cater to rural populations.

Historically rural consumers received lower pricing on roaming services from T-Mobile when
they travel to urban areas. However, the fees AT&T charges to allow other carriers to roam on
AT&T’s network are more than five times higher than the charges levied by T-Mobile for the
same roaming services. Simply put, this takeover will hit rural consumers the hardest.

As proposed, this horizontal merger would also provide fewer partnering options for smaller,
rural carriers. Ultimately, the strain on rural carriers caused by this merger will put a number of
them out of business. In the end, rural consumers could be left with only one option: AT&T,
which will have little incentive to lower its prices.

By strangling the competitive environment that has enabled the wireless industry to excel even
during a devastating economic recession, this acquisition would harm rural carriers, while
causing prices to rise steeply for consumers.

Together, we can make sure the Federal Communications Commission and the Department of
Justice understand that such ramifications for rural consumers are unacceptable. Please lend us
your support by urging them to uphold the antitrust laws that were put into place for this very
purpose and educating your constituency on this critical matter.

Sincerely,

Members of the Rural Broadband Policy Group:

Access Humboldt Center for Rural Strategies

Appalshop Institute for Local Self Reliance
Center for Media Justice Main Street Project

The Rural Broadband Policy Group is a growing national coalition of rural broadband
advocates with two goals: 1) to articulate national broadband policies that provide opportunities
for rural communities to participate fully in the nation’s democracy, economy, culture, and
society, and 2) to spark and kindle collaboration among rural advocates for fast, affordable, and
reliable Internet.

To learn more about the Rural Broadband Policy Group, please contact Edyael Casaperalta,
Coordinator, at edyael@ruralstrategies.org or visit us at
http://www.ruralassembly.org/working-groups/broadband